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Krugman’s Bad Faith
Posted by: Bryan Pick on Monday, January 26, 2009

I promised earlier today to do a post on Paul Krugman's latest article defending the stimulus, but I see Jon already covered most of it at The Next Right.

I would add a few more points:
The true cost per job of the Obama plan will probably be closer to $100,000 than $275,000 — and the net cost will be as little as $60,000 once you take into account the fact that a stronger economy means higher tax receipts.
First, this may be a merely semantic point, but there's a lot of daylight between $100,000 and $275,000 for the figure to be "closer to". How much closer to $100k?

And the second figure sounds highly optimistic. Are businesses and employees really going to pay $40,000 in higher taxes back for the "closer to $100,000" paid for each job? The federal government collects roughly 18% of GDP in taxes. $40,000/.18=$222,222. So if Krugman is implying a $100,000 true cost per job, he would have to assume a 2.22 multiplier for government spending, which (again) sounds pretty optimistic... or he's assuming a much higher tax rate. (Is there some problem with my arithmetic there?)

Among the other assumptions that would have to hold for his figure to be correct, his figure will only apply to those who would have been unemployed if not for the the government job. I assume that assumption contributes a great deal to Krugman's use of the words, "as little as".

Next point... Jon already responded to this point, but I have something else to add:
Next, write off anyone who asserts that it’s always better to cut taxes than to increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their money.

Here’s how to think about this argument: it implies that we should shut down the air traffic control system. After all, that system is paid for with fees on air tickets — and surely it would be better to let the flying public keep its money rather than hand it over to government bureaucrats. If that would mean lots of midair collisions, hey, stuff happens.
But, other than anarcho-capitalists, who says there is no worthwhile government spending? The stimulus debate is not even remotely about whether we should fund the air traffic control system, or anything else as vitally important - there is already a budget process in place for those projects - but about whether we should fund/speed up funding for thousands of wish-list projects and programs around the country. It should give you an idea of how thoughtful Krugman's objections are that he has to rely on a false dilemma (if some government spending is valuable, then complaints about completely different government spending must be spurious) to support his argument.
To Jon's comments, I would add:
Let's take Krugman's argument to its logical conclusion: why not have the government spend all our money? After all, if leaving the next $355 billion in the taxpayer's hands is tantamount to shutting down the most vital extant functions of government, surely it's true of the next $355 billion after that, and the next $355 billion, ad nauseam.

And does Krugman really think that airports and airlines would not run an air traffic control system if the government stopped paying for it, and just shrug when mid-air collisions happened? You don't have to be an anarcho-capitalist to call that into question—you just have to trust that airline companies and airports wouldn't want planes colliding and falling out of the sky. It's kinda bad for business.

But Jon's point is the primary objection here. To my ear, it sounds like this:
KRUGMAN: "I want to buy a long ton of butter."
RIGHT: "That sounds like an irresponsible expenditure."
KRUGMAN: "I suppose you want me to starve to death!"
Meanwhile, it’s clear that when it comes to economic stimulus, public spending provides much more bang for the buck than tax cuts — and therefore costs less per job created (see the previous fraudulent argument) — because a large fraction of any tax cut will simply be saved.
As I argued in my previous post, what if people do put a lot of the money into the bank? Isn't the administration trying to recapitalize the banks? Isn't the government trying to get them lending again?

I'll leave the question of what really gets the most "bang for the buck" to others.

Lastly, here's something we've seen a lot lately:
The most encouraging thing I’ve heard lately is Mr. Obama’s reported response to Republican objections to a spending-oriented economic plan: “I won.” Indeed he did — and he should disregard the huffing and puffing of those who lost.
Boy, the Left's attitude on listening to the minority sure has changed since November, hasn't it?

I'm sure Krugman (and, say, Pelosi) won't mind if Republicans take his advice next time they're in power.
 
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Comments
I believe that Krugman has public advocated for a multiplier of 1.5. Therefore, assuming that he earnestly generated the numbers in his article, he must not agree with one of the inputs you used.
 
Written By: OneEyedMan
URL: http://belligerati.net
TM over at JOM lets Krugman 2003 take on Krugman 2009.

Hilarity ensues.
 
Written By: Neo
URL: http://
so Krugman is a hypocritical dirtbag. Who knew :)
 
Written By: capt joe
URL: http://
So the Pres. says "I Won." I guess he’s seeing the logic behind W.’s infamous quote: "If this were a dictatorship, it’d be a heck of a lot easier, just so long as I’m the dictator."

Never mind the fact that we live in a representative democracy, and the men he shut down with "I Won" also won the support of the citizens they represent.

He’s really begging for the right to start trumpeting "Not My President," ain’t he?
 
Written By: Ronnie Gipper
URL: http://socalconservative.blogspot.com
"I won." Really. Way to start your presidency off with a new tone, O!
 
Written By: Ronnie Gipper
URL: http://socalconservative.blogspot.com
I am starting to see major Republican opposition to the "Let’s Bankrupt America" Plan by The Clown™ and His Clownettes™. If this thing had any major public support, you would be hearing the dingdongs on CNN and MSDNC saying, "Our new ____ poll shows that a majority support President Numbnuts’ Economic Stimulus Plan."

So, were are these pronouncements? They don’t exist because a majority of the public opposes the Plans of the The Clown™. Even though he is shiny new, just in office, taking the wrapping off the place and making sure terrorists are free and children can be aborted again using taxpayer money, somehow the memo to the people to support The Clown™ to bankrupt the country just didn’t get through, Paul Slugman to the contrary.

I would like to see every Republican oppose this boondoggle - because that is what it is. It will not "stimulate" the economy; it is goodies being handed out to the people who backed The Clown™ and His Clownettes™ in 2008. No more, no less. And laden with pork and wasteful spending times 1,000.

There needs to be a grass-roots wave, up from the people to Republicans, and to wavering (read: Blue Dog) Dems: Vote against this garbage, or lose your seats in 2010 or 2012, or whenever you run. Enough of this crap. Fight the Dimwit in the White House.
 
Written By: James Marsden
URL: http://
Can we call this thing what it is? The Great Democratic Pork Package of 2009!

(I guess they didn’t like being topped by Bush and the former Republican majorities in the spending department.)
 
Written By: Ronnie Gipper
URL: http://socalconservative.blogspot.com
My far left friend says that the ranking for stimulus spending for best effect is as follows:

1. defense
2. infrastructure
3. temporary tax rebates/consumer spending (only about 20% gets spent.)

My friend is far left...so I was surprised when he said defense spending had the greatest impact, so much so that I believed him.

If that’s true, let’s just buy a bunch of military items we can use and or stockpile. That’s probably a stimulus that more people could agree upon.
 
Written By: Harun
URL: http://
Funny how now the NYTimes and its preeminent columinist now think that evolving situations demand evolving responses:
Finally, ignore anyone who tries to make something of the fact that the new administration’s chief economic adviser has in the past favored monetary policy over fiscal policy as a response to recessions.

It’s true that the normal response to recessions is interest-rate cuts from the Fed, not government spending. And that might be the best option right now, if it were available. But it isn’t, because we’re in a situation not seen since the 1930s: the interest rates the Fed controls are already effectively at zero.
And how did these giants of thought think our response to asymmetric war declared and waged against the USA ought to be carried out? I suspect that Krugman et al would have had an entirely different response had a Democrat done all that the Republican did do. And they have the audacity to chide Limbaugh for hoping Obama’s policy aims fail.
 
Written By: bains
URL: http://
As I argued in my previous post, what if people do put a lot of the money into the bank? Isn’t the administration trying to recapitalize the banks? Isn’t the government trying to get them lending again?

You can’t recapitalize a bank by increasing citizen savings when said increased savings directly equal a massive plunge in consumer purchases. Because said plunge causes businesses everywhere to a) cut massive amounts of jobs - thus leading to, um, NOT increasing citizen savings for those people, canceling out your effects, and b) more importantly, creating massive business losses across the economy, which also... does not recapitalize banks. The reverse of that, actually.

And that’s how increased citizen savings leads to decreased bank net capital. And bank lending is not falling in a manner that has anything to do with what consumers are or are not saving. That’s why net savings fell and lending increased, together, for the past two decades.

are that he has to rely on a false dilemma

You mean, like, a metaphor? Is this some dirty rhetorical trick that Q&O is far too morally and rhetorically pure to ever consider?

I know this is a stretch, but I think Krguman’s implying that ... the current conservative arguments... are similar in type... to his metaphor... but NOT identical!!!!!!!!!!! Fancy that!

Not much of a post, Bryan. Several paragraphs of sarcasm - from the older-than-God "metaphors aren’t real" cliche complaint - and a recycled intellectual counterfactual from the last post.

Boy, the Left’s attitude on listening to the minority sure has changed since November, hasn’t it?

I’m sure Krugman (and, say, Pelosi) won’t mind if Republicans take his advice next time they’re in power.


Yawn. In a related note, I wonder how many hits I’d find on qando.net for "rooting to fail" in all its possible phrasings? I’m guessing there’d be several hundred, with 95% of those from various outraged commenters and front pagers accusing liberals of rooting for Bush to fail and calling them names in relation to it, and 5% of those hits cheering R. Limbaugh on for saying the exact same thing on Day 7-14.

Hypocrisy lectures on boring topics are, themselves, boring.
 
Written By: glasnost
URL: http://
But not as boring as you glasnost.
 
Written By: Grimshaw
URL: http://
glasnost -
As I argued in my previous post, what if people do put a lot of the money into the bank? Isn’t the administration trying to recapitalize the banks? Isn’t the government trying to get them lending again?

You can’t recapitalize a bank by increasing citizen savings when said increased savings directly equal a massive plunge in consumer purchases. Because said plunge causes businesses everywhere to a) cut massive amounts of jobs - thus leading to, um, NOT increasing citizen savings for those people, canceling out your effects, and b) more importantly, creating massive business losses across the economy, which also... does not recapitalize banks. The reverse of that, actually.

And that’s how increased citizen savings leads to decreased bank net capital. And bank lending is not falling in a manner that has anything to do with what consumers are or are not saving. That’s why net savings fell and lending increased, together, for the past two decades.
So many questions and observations.

First and most importantly, you have assumed that increased citizen savings "directly equal" a plunge in consumer purchases, or consumption in general, even in the context of a tax cut (indeed, a tax cut that may attract foreign capital). What’s your justification for that?
If you believe a fiscal stimulus is going to help, it can be accomplished through tax cuts just as it can be accomplished through government spending.

Second, even if a lot of the money is saved, no one believes that all of it will be saved — you’ll get some immediate consumption, too.

Third, you complain that businesses are cutting jobs. Well, cutting payroll taxes would relax the incentive to cut jobs, and invite firms to value labor higher.
If the plunge itself creates massive business losses, why not address those business losses directly by cutting taxes on said businesses?

So, what is it about Obama’s plan that’s so superior to mine? To the extent that the stimulus is unable to start spending money soon, the spending portion will be ineffective at addressing the massive plunge you’re talking about. If you believe we need a fiscal stimulus fast, well, public works projects are not the fastest way to get money back into businesses, banks and consumers’ hands.

So I return to my original point: if you’re going to build up a big deficit through a fiscal stimulus, then if a big chunk of that money is saved, that makes it easier for the banks to lend money to people and businesses who will, in turn, spend the money.
are that he has to rely on a false dilemma

You mean, like, a metaphor? Is this some dirty rhetorical trick that Q&O is far too morally and rhetorically pure to ever consider?

I know this is a stretch, but I think Krguman’s implying that ... the current conservative arguments... are similar in type... to his metaphor... but NOT identical!!!!!!!!!!! Fancy that!

Not much of a post, Bryan. Several paragraphs of sarcasm - from the older-than-God "metaphors aren’t real" cliche complaint - and a recycled intellectual counterfactual from the last post.
Krugman doesn’t just miss the finer points of metaphor or analogy. He creates a completely false dilemma.

It’s very simple: he says, if you prefer that the next $355 billion in spending goes to taxpayers directly rather than being spent by the government, you must object to all previous government spending (or at least such vital things as the air traffic control system).

And that’s ridiculously stupid, and he deserves to be called out on it. There’s no logical reason that the one belief follows from the other, no reason whatsoever. I invite you to try to defend it, but I think you’ll realize on reflection that it’s indefensible.
Boy, the Left’s attitude on listening to the minority sure has changed since November, hasn’t it?

I’m sure Krugman (and, say, Pelosi) won’t mind if Republicans take his advice next time they’re in power.


Yawn. In a related note, I wonder how many hits I’d find on qando.net for "rooting to fail" in all its possible phrasings? I’m guessing there’d be several hundred, with 95% of those from various outraged commenters and front pagers accusing liberals of rooting for Bush to fail and calling them names in relation to it, and 5% of those hits cheering R. Limbaugh on for saying the exact same thing on Day 7-14.

Hypocrisy lectures on boring topics are, themselves, boring.
If you don’t find this entertaining, there are other uses of your time besides commenting.

Do you find hypocrisy troubling, or don’t you? If you do, then by all means go ahead and call out everyone on the Right who booed at the obstructionist minority when they were Democrats, but make sure to apply your standards evenly to all the Democrats who passionately believed that the loyal opposition must be heard — until the Republicans became the loyal opposition.

I don’t doubt you’ll find lots of examples on both sides. When I say "I’m sure they won’t mind," I am of course being sarcastic, and I’m not suggesting that the Republicans act one way or the other — although I expect they will take the opportunity to remind Democrats of their change of heart.

If you don’t find hypocrisy troubling, then what are you rambling on about?
 
Written By: Bryan Pick
URL: http://www.QandO.net
It’s not perceived Democratic hypocrisy he has a problem with.
They never do.

Ah, but find some potential for it from a conservative? Like a dog on road kill.
 
Written By: looker
URL: http://
A helpful aid for comics that can’t come up with Obama jokes.

.. and my Mother always said it was a waste of money.
 
Written By: Neo
URL: http://

 
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